Global Infrastructure Challenges and Opportunities

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Georgiana Higgins
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1 Japan International Transport Institute Ritsumeikan Asia Pacific University Global Infrastructure Challenges and Opportunities August 1, 2011, Tokyo, Japan

2 Tremendous Challenges Global Infrastructure, Environmental and Financial Crisis 1

3 Infrastructure Sectors Energy Water Transportation Communications Public Facilities 2

4 World Population Explosion Billions

5 Urbanization Source: Treehugger.com 4

6 Environmental Concerns Climate Change The number of Category 4 and 5 Hurricanes has doubled in last 30 years (Intergovernmental Panel on Climate Change) Arctic Ocean ice free by 2050 (Arctic Climate Impact Assessment, 2004) More frequent and intense heat waves Droughts and wildfires more often More than a million species extinct by 2050 (Time Magazine, March 26, 2006) Global sea levels will rise by more than 20 feet (Washington Post, January 29, 2006) Source: An Inconvenient Truth (Al Gore) 5

frequent and intense heat waves Droughts and wildfires more often More than a million species extinct by 2050 (Time

7 Natural Disasters Hurricanes Earthquakes Pollution Droughts Air Water 6

8 Energy Shortages 2003 Northeastern US Blackout 7

9 Water Shortage Percent of Salt Water Total Amount of Fresh Water Percent in Ice, Glaciers, Snow Percent beneath the Ground Percent in Lakes and Rivers 97% 9 Million Trillion Gallons 69.6% 30.1% 0.3% Source: National Geographic 8

beneath the Ground Percent in Lakes and Rivers 97% 9

10 Safety I-35 Minneapolis 9

11 Urban Sprawl and Congestion 10

12 ASCE 2009 U.S. Report Card American Society of Civil Engineers 11

13 Global Infrastructure Spending Total Projected Cumulative

14 Financial Downturn Global Recession National Defaults Tremendous Deficit Positions at all Governmental Levels High Levels of Unemployment Reduced Consumer Spending Reduced Tax Revenues Limited Infrastructure Funding 13

Levels High Levels of Unemployment Reduced Consumer

15 Public Debt 14

16 Quality of Life Survival Safety Security Work Comfort Convenience Enjoyment 15

17 Global Competitiveness Infrastructure has a Direct Impact on Global Competitiveness Productivity Market efficiency Goods to market World Economic Forum Global Competitiveness Report 16

18 12 Pillars of Competiveness World Economic Forum Global Competitiveness Report

19 Overall Quality of Infrastructure World Economic Forum Global Competitiveness Report

20 Top 20 GC Index Rankings World Economic Forum Global Competitiveness Report

21 Public Private Partnerships Lack of Traditional Sources of Funding Anti-Tax Sentiment, User Fees Attractive to Private Investors Higher potential returns but greater risks Improved Project Delivery Integrated Approach Better Risk Allocation Between public and private sector Value for Money 20

22 Project Delivery Approaches Private Finance DBFOM PPP Segmented Procurement Packages CMGC DBF BOT DBO Integrated Procurement Package DB DBOM DBB Public Finance 21

23 Presidio Parkway PPP San Francisco, CA Source: SFCTA/Arup/PB 22

24 Delivery Options Comparisons Presidio Parkway Project Ranking Source: SFCTA/Arup/PB Lower Medium Higher 23

25 Autoroute 25 Montreal, Canada Source: A25 Value for Money Report, Transports Quebec/Price Waterhouse Coopers, Nov

26 Special Purpose Vehicle Contractor Equity Financial Equity Technical Advisor Holding Co Financial Advisor Public Sector Concession or Comprehensive Development Agreement (CDA) SPV Special Purpose Vehicle Debt Technical Advisor Financial Advisor O&M Team Construction Team Technical Advisor O&M Provider Designer Contractor 25

27 UK Public Finance Initiative Approximately 1000 Projects for over $100 Billion 26

28 Business Opportunities The Full-Service Mega-Developer Finance/Design/Build/Operate/Maintain A Case Study - Parsons Brinckerhoff 27

29 Global Contractors Engineering News Record No. of Companies with Revenues Greater than $10 Billion

30 Global Contractor Rankings Engineering News Record Rank Company 2005 Rev ($B) Company 2010 Rev ($B) 1 Vinci 24.3 China RR Constr Bouygues 20.1 China RR Group Hochtief 15.0 Vinci Grupo ACS 14.9 Bouygues Bechtel 14.4 China Comm Grp Skanska 14.1 China State Corp Taisei 13.8 Hochtief Kajima 13.2 China Metal Shimizu 12.6 Bechtel Obayashi 12.6 Grupo ACS

31 International Contractor Rankings Engineering News Record Rank Company 2005 Rev ($B) Company 2010 Rev ($B) 1 Hochtief 12.6 Hochtief Skanska 11.4 Vinci KBR 19.8 Strabag Vinci 9.2 Bechtel Bechtel 8.1 Bouygues Bouygues 7.4 Skanska Technip 6.4 Saipem Fimag Finanz 6.0 Bilfinger Berger Royal Bam 5.0 Fluor Bilfinger Berger 4.9 Technip

32 31

33 William Barclay Parsons Founded Firm in 1885 Of all human activities, engineering is the one that enters most into our lives. 32

34 Henry Brinckerhoff Traction Power Engineer Co-Inventor of Third Rail 33

35 Opportunity New York City Circa 1900 Source: New York Transit Museum Professor Gary Griggs Stanford University International Seminar on Project Finance for Overseas Infrastructure Development through BOT/PPP Schemes 34

36 Technology and Innovation Parsons was Chief Engineer of First NY Subway (IRT) Electric Third Rail Cut-and-Cover Construction Ground Breaking City Hall Station Source: New York Transit Museum/Scientific American/Peter Dougherty 35

37 Global Transit Expansion San Francisco Los Angeles Seattle Denver Caracas Dublin New York Wash. DC Atlanta Miami London Cairo Dubai Beijing Guangzhou Shanghai Hong Kong New Delhi Bangkok Singapore Seoul Taipei Manila Sao Paolo Brisbane Sydney Buenos Aires 36

38 CA High Speed Rail Source: California HSR Authority 37

39 Boston Central Artery/Tunnel $14.6 Billion Rebuild of Boston s Highway System Zakim Bridge Ted Williams Tunnel I-93 Central Artery Source: Mass DOT/Bechtel/PB 38

40 Boston Central Artery/Tunnel Before and After Source: Mass DOT/Bechtel/PB 39

41 Dulles Toll Road PPP Virginia 40

42 San Diego Expressway PPP California 41

43 Professional Services Firm 13,000 Employees, $2 Billion Revenue (2009) Operations & Maintenance Management Consulting Planning Development Environmental Program Management Engineering Construction Management Architecture 42

44 George Balfour Andrew Beatty Founded in 1909 as engineers, contractors, operating managers for tramways, railway properties and for promoting of new enterprises. 43

45 Balfour Beatty/PB Merger New Civil Engineer (September 17, 2009) Adding Parsons Brinckerhoff s successful and well-established international professional services business to Balfour Beatty s very significant construction, existing professional services and investment businesses will create a group with significantly enhanced capabilities to address the needs of key infrastructure customers internationally. 44

46 Full Service Capabilities Finance/Design/Build/Operate/Maintain Construction Services Infrastructure Investments Facilities Services Professional Services 45

47 Professional Services Parsons Brinckerhoff Heery International Construction Services BB Construction BB Rail BB Infrastructure Support Services BB Workplace BB Communities Infrastructure Investments BB Capital, UK BB Capital Group BB Capital, Canada 25% 30% 15% 30% 2010 Total Revenue*: US$16.9 Billion Employees: 50,000+ A conversion rate of 1 = 1.6 US$ has been used throughout to derive US dollar values *Includes share of JVs and associates 46

48 Balfour Beatty Selected Investment Projects Exeter Airport, UK US Hunter Army Airfield Housing Barking Power Station, UK 47

49 Business Strategies Grow or Die Global but Local Green and Sustainable Strategic Teaming Finance Capabilities Full Service Manage Risk Do the Right Thing! 48

50 President Obama Innovation, Education and Infrastructure. 49

51 Yes We Can! Japan Wins World Cup Womens s Soccer Championship 50

52 Thank You! 51

ENR TOP INTERNATIONAL CONTRACTORS

ENR TOP INTERNATIONAL CONTRACTORS 1 The Top 250 Global Contractors How to use the tables: Companies are ranked according to total construction revenue in 2013 in U.S. $ millions. Figures include prime